5 Key Logistics Trends and Technology Implications for 2019
What an exciting year 2018 was in logistics and transportation management! Many companies started to reach beyond traditional strategies and approaches to take their logistics and transportation capabilities to new levels. Ecommerce continued to grow at record levels and there didn’t appear to be the slowdown that many were predicting. There was considerable global trade instability and the focus of many companies was to determine what strategies they needed to put in place to mitigate the brewing trade wars and Brexit uncertainty. Market hype was also at an all-time high, making it harder to identify the best opportunities for technology investments. The question now for logistics and transportation professionals is what will drive 2019 strategies and investments to meet the market challenges and provide the greatest returns.
Here are my thoughts on five key trends for 2019.
Collaborative Transportation Management
The concept has been discussed, but never realized on a large scale. With the capacity shortage continuing for the perceived future, shippers and LSPs are looking for ways to expand their network. Real-time visibility solutions can identify the capacity that is trapped in a given network. New solutions have been developed to allow companies to share capacity and cover a greater percentage of the loads. Work in 2018 has shown that, as the number of participants expand, the ability to dramatically increase available capacity rises. Collaborative transportation management will be the fastest way in 2019 for shippers and LSPs to meet their transportation capacity challenges.
The Global Trade Scramble
For many shippers and LSPs, there is no choice but to spend a lot of time and effort on strategies and tactics to mitigate the impacts of the current US administration, the affected countries and Brexit. The uncertainty that exists in the market is what is most disconcerting and driving this high level of focus. In North America, changing duties and quotas are driving companies to develop new sourcing strategies, evaluate the impact of new duties on the bottom line and vet new suppliers. Brexit is even more problematic for Europe as companies try to understand the effects on their supply chains and logistics services if the seamless flow of goods stops between the UK and the rest of Europe. In 2019, companies will focus on global trade and customs solutions that can help them navigate the potential changes, glean clearer insight into alternative trade opportunities that exist and ensure compliance with much higher customs clearance requirements. 2018 was also a very active year in the area of sanctioned parties list expansions, stepped up enforcement actions especially on challenging rules like the OFAC 50%, and it is very likely the pace of sanctions and enforcement actions will ramp up in 2019.
Home Delivery Hangover
Again, another “no choice” for retailers as consumer expectations for home delivery continue to rise with, again, record online sales during the 2018 holidays. Retailers will be focused on getting costs in line and better understanding what customers want and are willing to accept for home delivery services. In 2018, companies started to get a better perspective on the different kinds of expectations customers had for delivery services, and that “as fast as possible” and “free” were more market hype than reality. In addition, leading retailers started to focus on understanding the balance between delivery service and the fees charged and—most importantly—understanding that allowing consumers to self-select their delivery options based upon speed and price could lower or recover delivery costs. In 2019, retailers will increasingly look for home delivery solutions that allow them to provide consumers with delivery choice, and even steer them to options that help the bottom line.
As ecommerce grows, so does parcel shipping. In 2018, the rapid expansion of domestic and international parcel shipping continued. Carriers established more aggressive pricing and delivery strategies to keep pace with the increasing demand and improve profitability. Governments adopted more stringent tariff policies to make sure they were not missing an increasingly large revenue stream from ecommerce direct from Asia. As the cost and complexity of parcel shipping increases in 2019, companies will deploy solutions that can minimize their parcel shipping costs through more intelligent carrier and mode selection, and effectively address international requirements such as landed costs, restricted party checking and customs filings.
Technology – Some Hot & Some Not
There was not a day in 2018 when some organization or technology company was not announcing their AI, Machine Learning, Big Data or Blockchain solution or initiative. Even the business and trade press pointed to these technologies as ushering in a new era in logistics technology. As 2018 unfolded, however, there was a divergence in the value of some versus others that will carry into 2019. In 2019, there will be greater investment in—and results from—AI, Machine Learning and Big Data because of the ability of these technologies to significantly augment existing solutions and deliver business value in the near term. Unfortunately for Blockchain, it heads to the “trough of disillusionment” for the next year as pilots end and questions remain about the change and costs required to deploy it, its technological limitations and, most significantly, the lack of standards. For anyone who has been in the tech industry for 20 years, Blockchain should be a reminder of the hype that XML received in the late 90s. The question for the value of Blockchain isn’t if, just when.
The macro trends of ecommerce, global trade destabilization and the over-the-road transportation capacity shortage will continue to shape 2019 just as they have in 2018. Shippers and LSPs are realizing that they must act differently to survive or thrive and will more aggressively adopt new logistics and transportation technology solutions. It has been 20 years since the impact of technology was so prominent in the transformation of logistics and transportation. How will your company use logistics and transportation technology to impact performance in 2019? Let me know.
Chris Jones is the EVP of Marketing and Services for Descartes – The global leader in uniting logistics-intensive businesses in commerce.